Redundancy rights

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In the current economic climate, it is not uncommon to see businesses going bust. With some major retailers (think Wilko and Woolworths) disappearing from the high street in recent years, hundreds of workers have been left to face redundancy.

But when you hear the word ‘redundancy’ it can often be a scary and confusing time. What happens next? Will I receive a redundancy payout? What is my notice period? And how long do I have to find a job? Might be just a few of the questions running through your head.

Redundancy rights

Many of the answers to these questions will depend on the circumstances of the business, but there are strict employment laws in place to ensure that redundancy is carried out fairly.

We have rounded up some of your rights when you have been made redundant.

What is redundancy

Redundancies occur when a business scales down its workforce or closes completely. This might occur in the following instances:

Ceasing or intending to cease to carry on the business for which the employee was employed (also known as a business closure);
Ceasing or intending to cease to carry on that business in the place where the employee was employed (this is a workplace closure); or
They may have a reduced requirement for employees to carry out work of a particular kind or to carry out work of a particular kind at the place where the employee was employed to work (essentially, a reduced requirement for employees).

To ensure that a dismissal for redundancy is fair, an employer must establish that Redundancy is the real reason for the dismissal and that the employer acted reasonably in the circumstances in treating redundancy as the reason for dismissing the employee.

When does redundancy occur?

Redundancy should only be considered as a last resort, and there is a duty on the employer to consider all other options before making redundancies. Initial considerations that the employer should contemplate include:

Suspending or restricting recruitment.
Reduction or removal of overtime opportunities.
Not renewing the contracts of contractors.
Ceasing or reducing the use of agency workers.

I’m at risk of redundancy. What will happen?

Before redundancies occur, you will be told by your employer if you are at risk. But this does not necessarily mean you will lose your job.

In some instances, your employer may decide to keep you in your existing role or try to deploy you. However, you have the right to refuse an offer of alternative employment, but if you unreasonably refuse an offer of suitable alternative employment you miss out on your statutory redundancy pay.

Your employer must follow a set of procedures under UK law to ensure the redundancy is fair. If you have worked for your employer for more than two years, and they fail to follow the procedures, your dismissal could be deemed unfair.

In the case of your employer reducing staff numbers in a particular role, they must:

Identify a suitable pool of people to select from
Use fair selection criteria to decide who from the pool will be made redundant
Consult with each employee meaningfully about any possible alternatives to redundancy
Consult with trade unions/staff representatives if more than 20 redundancies are proposed within 90 days.

If your employer fails to comply with the law, it means a claim can be made, and may result in an employment tribunal finding the dismissal to be unfair.

If the tribunal agrees that the dismissal is unfair, compensation may be awarded.

You can’t be made redundant for certain reasons

If you are notified of being at risk of redundancy, your employer must give you a full explanation of why you have been selected. If the reasons fall under any of the reasons below, it may be deemed unfair.

Pregnancy
Being on maternity, paternity or parental leave
On the grounds of a protected characteristic, including your sex, race, sexual orientation, any disability, gender reassignment, religion or belief
For whistle-blowing
For making a flexible working request
Your role as a representative for, or your membership of, a trade union
Working part-time or on a fixed-term contract
Your work as an employee representative
Being a pension trustee
Reasons relating to your rights to minimum pay and working hours, including annual leave.

Notice periods

If you have been informed that you are being made redundant, you are usually given a notice period before your employment contract ends. The length of your notice periods will vary depending on what is in your contract and for how long you have been with the company.

Statutory minimum notice periods in England, Wales and Scotland are:

At least one week if you’ve been with the company for between one month and two years
For those employed for between two and 12 years, a week for each year of employment
If employed for 12 years or over, 12 weeks.

In some cases, your employer may give you a longer notice period, regardless of how long you’ve worked for it.

But if the company is unable to keep you on for your notice period (for example, if it’s going out of business), you’re still entitled to compensation for your notice period

You may be offered payment in lieu of notice. This means your employer asks you to leave the firm earlier but still pays your basic salary for your notice period.

Unless your contract says otherwise, it’s unlikely you will be entitled to the monetary equivalent of any entitlements/benefits you would have received had you worked your notice period, for example, pension contributions.

Redundancy package

If you have been made redundant, you will be entitled to a redundancy package. The amount you receive will depend on several factors including what your contract says and what is agreed in your consultation.

If you have worked for your employer for two years or more, you are usually entitled to statutory redundancy, which is worked out based on your age and how long you worked for the business (up to a maximum of 20 years of service).

Statutory redundancy pay

Statutory Redundancy Pay is given based on your age and how long you worked for your employer. We have broken down how much you could receive per full year of work.

Up to 22 years old – half a week’s pay

22-40 – One week’s pay

41 and older – 1.5 weeks’ pay

However, there is a cap on how much redundancy pay you can get, with a weekly cap of £643 and a maximum total cap of £19,290. If you were made redundant before 6 April 2023, these amounts will be lower.

But in some instances, such as if you refuse suitable, alternative work with your employer, without a valid reason, you won’t be eligible for statutory redundancy pay.

Statutory redundancy pay tends to be a minimum but your employer may offer you more if discussed during your consultation.

But whether you’re offered more money or not, you’re still entitled to any holiday pay, commission and bonuses you are owed. These types of payments will be subject to tax.

How will I receive my redundancy pay?

You should receive your redundancy pay on the date you leave the company or your next normal pay date. This will usually be paid into your bank account.

Your employer should also provide you with a written document stating how your redundancy payment was calculated. If you do not receive your payment, you should write to your employer to request it.

But if you still have not received it, you have three months less than one day from the date you should have received any outstanding salary, commission, bonuses or holiday pay to issue an Employment Tribunal claim.

Settlement agreements

If you are being made redundant your employer might ask you to sign a settlement agreement. A settlement agreement is a legally binding agreement written by lawyers, which means you give up the right to make a future claim against your employer. In exchange of signing the agreement, you are usually receive a financial offer from your employer.

Settlement Agreements are often issued if you are leaving your job on complicated grounds. For the contract to be legally binding, you need to take legal advice to go through the contract with you. Your employer will normally pay for the cost of you getting legal advice.

You should ensure you fully understand the clauses of the agreement before you sign it.

Unfair dismissal

If you have been dismissed from work and you believe the reason or reasons for your dismissal was unfair, you may have a claim for unfair dismissal.

Unfair dismissal is when your employer has dismissed you from your job role without good reason or by failing to follow the companies disciplinary policy.

An example of this could be that you have been dismissed after your employer found out you joined a trade union, or you requested time off work for maternity leave.

As an employee, laws are in place to protect you from being dismissed unfairly at work, especially if you have been employed with the company for more than two years.

Your dismissal may be unfair if you have been dismissed due to one of the following:

Asked for flexible working
Refused to give up your working time rights – for example, to take rest breaks
Resigned and gave the correct notice period
Joined a trade union
Took part in legal industrial action that lasted 12 weeks or less
Needed time off for jury service
Applied for maternity, paternity and adoption leave
Were on any maternity, paternity and adoption leave you’re entitled to
Tried to enforce your right to receive Working Tax Credits
Exposed wrongdoing in the workplace (whistleblowing)
Were forced to retire (known as ‘compulsory retirement’)

If you believe you have been unfairly dismissed from your job, you may be entitled to claim against your employer. Oakwood Solicitors team of employment lawyers will be happy to assist you in making a claim by calling 0113 200 9720 today.

What are my redundancy rights?

In the current economic climate, it is not uncommon to see businesses going bust. With some major retailers (think Wilko and Woolworths) disappearing from the high street in recent years, hundreds of workers have been left to face redundancy.

What is redundancy

When does redundancy occur?

I’m at risk of redundancy. What will happen?